With pipeline unclogging, foreclosures jump

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Baltimore’s foreclosure rate was the highest among large U.S. cities last month — up 296 percent over October 2012 as a backlog of foreclosures continued to clear through the courts, said a report by RealtyTrac, a national foreclosure data company.

In addition, Maryland’s foreclosure activity in October was the third-highest in the nation, the report showed. Filings across the state increased 10 percent from September 2013, with a total of 4,589 filings recorded.

One in every 516 Maryland housing units had a foreclosure filing in October, the report said.

Officials said the increases in the state were based on an uptick in judicial foreclosure cases, previously stalled in the courts because of 2010 legislation in the General Assembly that mandated counseling for distressed homeowners.

“RealtyTrac reported that Maryland has one of the highest foreclosure rates in the nation. The October report is the anticipated result of lenders continuing to work through their backlog of long-term delinquent loans and not an indication that the foreclosure situation has worsened,” Raymond A. Skinner, secretary of the Maryland Department of Housing and Community Development, said in a statement released late Wednesday.

Baltimore was listed alongside Miami, Tampa, Fla., Chicago and Riverside-San Bernardino, Calif., in the top 10 national foreclosure rates. One in every 328 dwellings in Baltimore was in foreclosure, RealtyTrac data showed.

Last month, the total number of foreclosure filings in the city hit 2,303, an increase of 2 percent over September 2013 and a hike of 296 percent from October 2012, when the number of filings totaled 582, the report said.

The city’s data was nearly matched by other areas in Maryland with high foreclosure rates: Prince George’s County, where one in every 373 dwellings had a foreclosure filing, and Queen Anne’s County on the Eastern Shore, with one in every 392 dwellings showing a notice.

RealtyTrac officials said Wednesday they gathered their data from public records filed in local courthouses — foreclosure documents filed, complaints filed by lenders and deed transfers after public foreclosure auctions occurred.

“This is not a survey of the banks,” said Daren Blomquist, vice president at RealtyTrac.

“Maryland posted the nation’s third-highest state foreclosure rate in October, up from the No. 4 spot in September, thanks to a 10 percent monthly increase and 201 percent year-over-year increase in foreclosure activity — the 16th consecutive month where Maryland foreclosure activity has increased on an annual basis,” a statement from the RealtyTrac report said.

Blomquist said in a statement that the spike in activity in Maryland, in Baltimore and other U.S. cities is due, in part, to the disintegration of a legal backup of cases caused by volume and attempts to stem the loss of dwellings by state legislatures.

“The backlog of delayed judicial foreclosures continues to make its way through the pipeline, with many of these properties now being scheduled for the public auction after starting the foreclosure process last year or earlier this year,” Blomquist said.

“Lenders are likely moving these properties more rapidly to the public auction given that there is strong demand from institutional buy-to-rent investors at the auction and that rising home prices mean more of the loan losses can be recouped, either by selling to an investor at the auction or by repossessing the property and reselling as bank-owned.”

Blomquist predicted that the foreclosure rates in Maryland would remain high for another two years because of the new movement of court cases by lenders.

“I think the good news is about this not being a new wave of distress. It’s an old wave that just took longer to make its way through the pipeline,” he said.

“Even though these numbers are eye-popping now, I think we’ll eventually see them get lower. In Maryland, at the end of 2010 to mid-2012, the state experienced a lull” because of state-mandated foreclosure prevention action.

In response, Skinner’s statement said Maryland’s foreclosure prevention counseling and legal services have helped homeowners “achieve loan modifications and refinancing at levels far exceeding neighboring states.”